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Steelcase Inc. put a closed-loop energy recovery system into operation in August, 1980, with the installation of a $1.1 million waste incinerator. The system provides steam for process applications in the company's main complex. Processable waste includes wood, cardboard, paper, fabrics, paint sludge, and solvent sludge. Incineration reduces waste volume, cutting landfill and hauling charges substantially. Heat recovery has lowered natural gas bills by 10%. Net annual savings average more than $250,000, and a payback period of 3.4 years is projected for the system. The energy recovery program at Steelcase Inc. is based on the premise that there is a very important relationship between money and trash. For years, Steelcase not only threw its trash away, but, in fact, incurred the expense of transporting accumulated waste from the plant complex in Grand Rapids, Michigan, to public landfill sites in other parts of the state. In other words, we were wasting money by ignoring a perfectly good energy source, and wasting additional money by hiring contract haulers to take that energy source to the dump.
Steelcase is the world's largest manufacturer of office furniture. More than 5,000 people work at our main complex, where facilities cover 6,000,000 square feet. We pioneered the movement toward systems furniture ten years ago. And now, with the same innovative spirit, we're tackling the problem of energy recovery.
When the cost of fossil fuels began soaring in the mid-1970's, company engineers took a long, hard look at our disposal methods and our energy situation and started laying the groundwork for a closed loop system. In 1979, after years of study, a local engineering firm was hired to help us design and install the equipment for a steam-generating waste incinerator in the Michigan center of the Steelcase complex. The result is the new Energy Recovery Plant, completed in August, 1980, at a cost of $1.1 million.
The plant has been in operation approximately eight months, and it is already running at a rate of efficiency that exceeds our expectations. We had an estimated savings of more than $280,000 in 1980 alone; and our projections for the next few years indicate that the amount of our savings will grow each year, in keeping with predicted increases in the price of fuel. We estimate a payback period for the plant of less than three years.
Steelcase chose incineration as the method of energy recovery for a variety of reasons. Feasibility studies showed that incineration would be a relatively low-cost investment. The waste stream going into an incinerator requires little or no preparation, so we realized an immediate savings in the purchase and operation of processing equipment. Incineration reduces the volume of our waste stream by approximately 90% which means that hauling costs and landfill charges are substantially reduced. Furthermore, an incinerator system can be installed on a modular basis. A modular approach appealed to us because it gave us an extra measure of flexibility and enabled us to commit corporate funds in a step-by-step manner.